Court dismisses business owners’ COVID-19 coverage appeal

More than four years since the start of lockdowns meant to stem the spread of COVID-19, Canadian courts continue to hear cases from businesses saying those restrictions damaged their operations.

And, much as was seen during the initial adjudications of those claims, the legal actions continue to be dismissed. Such was the case in a Jun. 14, 2024 Ontario Court of Appeal decision, Workman Optometry Professional Corporation v. Certas Home and Auto Insurance: 2023 ONSC 3356.

The appellants run small and medium-sized businesses that require customers to visit their physical premises to buy goods and services. The business types include optometrists, food service providers, clothing stores, bakeries, and wellness and dance studios.

Documents for the appellate case indicate “all the appellants had purchased standard form business interruption insurance policies with various Canadian insurance companies who are the defendants/respondents in the lawsuit.

“In the various insurance policies, the business interruption coverage insured losses of earnings or profits where the business interruption resulted from ‘physical loss or damage’ to property.”

Physical loss or damage

All the appellants made insurance coverage claims for their losses, which were denied by their various insurers. At a class action common issues trial that preceded this latest appeal, the trial judge asked and answered three questions:

Can the presence of the COVID-19 virus (SARS CoV-2) or its subsequent variants “cause physical loss or damage to property within the meaning of the business interruption provisions of each defendant’s property insurance?”
“Can an order of a civil authority in respect of business activities that was made due to the SARS CoV-2 virus or its variants cause physical loss or damage to property within the meaning of the business interruption provisions of each defendant’s property insurance wordings?”

The judge said the answer to both of these questions was ‘No.’

Question three hinges on one or both of the first two questions being answered with a ‘Yes.’ Had that been the case, it would become necessary to ask, “Are there any exclusions in any of the defendants’ property insurance wordings that would result in coverage for such loss or damage being excluded?”

But, since the first two questions were answered with ‘No,’ the judge deemed it unnecessary to answer the third question.

During the appeal, the class action asserted the trial judge “incorrectly held that the real or apprehended physical presence of SARS-CoV-2 on commercial property was not ‘physical damage’ to the extent that it rendered the property dangerous; [and] incorrectly held that a ‘loss of use’ resulting from the presence of SARS-CoV-2 did not amount to ‘physical loss’ within the meaning of the various insurance policies.”

The three appellate judges did not accept these assertions.

“On both issues, we agree with the reasoning and conclusions of the trial judge,” they wrote in dismissing the appeal. “[The trial judge’s] reasoning is thorough and impeccable and his conclusion is correct.”

Feature image courtesy of iStock/BlackJack3D